Last week, domestic cotton prices rose rapidly after oscillations; international cotton prices first fell and then rose, higher than last week’s average price; domestic cotton yarn prices showed a marginal weakening trend, and international cotton yarn prices stopped rising and fell; polyester staple fiber prices Turned lower.
1. Domestic cotton prices rose
Last week, the cotton textile market was calm. The market was waiting for policy guidance. Short-term funds took the opportunity to enter the market and promote domestic cotton prices. The price rose rapidly after a weak oscillation. From June 28 to July 2, 2021, the average settlement price of the main cotton futures contract on the Zhengzhou Commodity Exchange was 16,021 yuan/ton, an increase of 314 yuan/ton or 2.0% from the previous week; representing the market price of standard grade lint cotton in the Mainland The average price of the national cotton price B index was 16,013 yuan/ton, an increase of 156 yuan/ton from the previous week, an increase of 1.0%.
2. The international cotton price first fell and then rose, higher than last week’s average price
Last week, due to the decline in the actual sown area of US cotton, it was lower than the market. Due to the expected impact, international cotton prices fell for a time, with ICE cotton prices falling below 85 cents/pound. After the sharp drop in cotton prices, speculative bulls entered the market to hunt for the bottom and once again raised cotton prices. From June 28 to July 2, 2021, the average settlement price of the main contract of Intercontinental Exchange Cotton Futures (ICE) was 86.45 cents/pound, an increase of 0.11 cents/pound or 0.1% from the previous week; representing imported cotton from China The average international cotton index (M) price of the main port CIF price is 97.47 cents/pound, an increase of 0.66 cents/pound or 0.7% from the previous week, and the import cost in RMB is 15,579 yuan/ton (calculated based on 1% tariff, Including port miscellaneous goods and freight), it increased by 82 yuan/ton, or 0.5%, from the previous week. The international cotton price was 435 yuan/ton lower than the domestic cotton price, and the internal and external price difference expanded by 75 yuan/ton compared with last week.
3. Domestic cotton yarn prices weakened marginally and international cotton yarn prices fell
Last week, the textile market changed little, and traders purchased yarn less frequently. The price of pure cotton yarn first rose and then fell; the early price of imported yarn was falsely high. Recently, there were few orders in China, and traders lowered their quotations. The price of foreign yarn ended the rise since mid-May; the current price of conventional foreign yarn is 313 higher than that of domestic yarn. Yuan / ton. The domestic downstream gray fabric market is in the proofing and development stage. There are not many actual orders overall, and the price of pure cotton fabrics remains stable. The supply of polyester staple fiber is light, and the price has turned from rising to falling with the raw material PTA. The average price is still higher than last week’s level.
4. Market outlook
Global economic recovery and price surge continue , the international cotton market returned to fundamentals. The U.S. manufacturing PMI in June was 60.6%, down 0.6 percentage points from May. An indicator of the price paid for raw materials soared to the highest level since 1979. The International Monetary Fund (IMF) predicts that the Federal Reserve will raise interest rates as early as the end of 2022. , may start to reduce the scale of asset purchases from the first half of next year. In the international cotton market, the growth of new cotton in the United States continues to improve, with the budding progress reaching 32%, an increase of 11 percentage points from the previous week; cotton sowing in India is progressing smoothly, and the southwest monsoon has alleviated the drought in cotton fields. The latest global production, sales and inventory forecast released by ICAC has significantly increased global cotton consumption in 2020/21, resulting in the expected growth of global cotton consumption in 2021/22 slowing down to 0.78% year-on-year to 25.8 million tons, with output increasing 5.66% year-on-year to 25.59 million tons. Ton. As the epidemic stabilizes, textile factories in Pakistan and southern India have resumed operations. Vietnam People’s Daily reported that workers in Vietnamese textile, shoe and clothing companies will soon return to factories in July. Due to the resumption of centralized loading and shipping at ports, shipping freight rates have risen again recently. Following the 2.9% month-on-month increase in terminal apparel retail sales in the United States in May, the U.S. consumer confidence index showed a rebound in June. To sum up, the global economy continues to recover, expectations of tightening of the Federal Reserve’s monetary policy continue to brew, and the subsequent international cotton market will gradually return to fundamentals and maintain oscillation in the short term.
Macroeconomic policies take the lead in maintaining stability, and domestic cotton prices continue to remain stable. Since late June, the central bank has launched small-scale liquidity injections, achieving stable liquidity across quarters. Recently, the central bank has once again emphasized that it must implement monetary policy flexibly and accurately to promote further declines in actual lending rates. In the domestic cotton market, cotton in Xinjiang has been growing well recently, and cotton has gradually entered the bud and flowering stages. It is expected that cotton topping work will begin one after another after July. In the spot market, the recent trend of “bonded cotton increasing and non-bonded cotton decreasing” in foreign cotton warehouses in China’s main ports has been increasing; cotton reserve rotation will begin next week, and 600,000 tons are planned to be rotated out from July 5 to September 30. , in principle, implement balanced delivery. This time the circuit breaker mechanism is adopted again to maintain the smooth operation of the market. At present, downstream spinning profits are still high at more than 1,500 yuan/ton, but the textile market has entered the off-season, and traders have high cotton yarn inventories. Recently, spinners lack the confidence to raise prices again and are worried about resistance from downstream customers. With the start of the cotton reserve rotation, domestic textile companies will have the opportunity to purchase more cost-effective cotton resources, which will help improve the competitive advantage of domestic yarn. Under the guidance of relatively stable policies, domestic cotton prices are expected to run smoothly.
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